can a testamentary trust be a qualified revocable trust?


G

Gary Goodman

I'm referring to IRC Section 645 elections. A qualified revocable
trust (QRT) is defined in 645(b)(1) as "any trust (or portion thereof)
which was treated under Section 676 as owned by the decedent of the
estate referred to in subsection (a) by reason of a power in the
grantor (determined without regard to Section 672(e))"
 
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A

Alan

I'm referring to IRC Section 645 elections. A qualified revocable
trust (QRT) is defined in 645(b)(1) as "any trust (or portion thereof)
which was treated under Section 676 as owned by the decedent of the
estate referred to in subsection (a) by reason of a power in the
grantor (determined without regard to Section 672(e))"
If you are asking whether a revocable trust (living trust/grantor trust)
that would become irrevocable upon the death of the grantor is a
"qualified revocable trust" for purposes of Section 645, the answer is
yes. The whole idea is that the executor (if any) and the trustee can
elect to treat a "qualified revocable trust" as part of the decedent's
estate for Federal income tax purposes. The election must be made by
BOTH the estate executor (if any) and the trustee of the revocable trust
not later than the time required for filing (including any extensions)
the income tax return of the estate for its first tax year.
There's a revenue procedure on how to make the election.
 
G

Gary Goodman

On 4/27/11 12:45 PM, Gary Goodman wrote:> I'm referring to IRC Section 645 elections. A qualified revocable

If you are asking whether a revocable trust (living trust/grantor trust)
that would become irrevocable upon the death of the grantor is a
"qualified revocable trust" for purposes of Section 645, the answer is
yes.  The whole idea is that the executor (if any) and the trustee can
elect to treat a "qualified revocable trust" as part of the decedent's
estate for Federal income tax purposes. The election must be made by
BOTH the estate executor (if any) and the trustee of the revocable trust
not later than the time required for filing (including any extensions)
the income tax return of the estate for its first tax year.
There's a revenue procedure on how to make the election.

--
Alan
http://taxtopics.net

--
Thanks Alan. I read the code over and over. I had to ignore the
dictionary definition of revocable in order to see how a testamentary
trust could be revocable. (By changing the will!)

The remaining problem is that the estate has been filing 1041s when
all the assets are owned by the trust.

Gary
 
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A

Alan

Thanks Alan. I read the code over and over. I had to ignore the
dictionary definition of revocable in order to see how a testamentary
trust could be revocable. (By changing the will!)
I'm not sure where you are going with this. But, an irrevocable trust
that is created by one's will (testamentary trust) is not a QRT and can
not be revoked after death. The terms in a will that create a
testamentary trust can be modified while the individual is alive.
However, this is not the same as treating a QRT as part of one's estate
for tax purposes. Also note, that one needs to check state law to see
whether a fiduciary return has to be filed when a change in a will
modifies the terms of a trust.
The remaining problem is that the estate has been filing 1041s when
all the assets are owned by the trust.
An estate can not file a 1041 and include income from assets that the
estate does not own. An estate can file a 1041 and include income from
assets of a QRT as long as the Form 8855 was filed on a timely basis.
 

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